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Public Act 91-0549
HB1348 Enrolled LRB9102806JSpc
AN ACT concerning insurers, amending named Acts.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 5. The Illinois Insurance Code is amended by
changing Sections 3.1, 35A-5, 35A-10, 35A-15, 35A-20, 35A-30,
35A-55, 35A-60, 245, 356h, 356v, 364, 367, and 367i as
follows:
(215 ILCS 5/3.1) (from Ch. 73, par. 615.1)
Sec. 3.1. Definitions of admitted assets. "Admitted
Assets" includes the investments authorized or permitted by
this Code, the credit for reinsurance allowed by this Code,
and in addition thereto, only the following:
(a) Petty cash and other cash funds in the company's
principal or any official branch office and under the control
of the company.
(b) Immediately withdrawable funds on deposit in demand
accounts, in a bank or trust company as defined in Section
126.2MMM(1) or like funds actually in the principal or any
official branch office at statement date, and, in transit to
such bank or trust company with authentic deposit credit
given prior to the close of business on the fifth bank
working day following the statement date.
(c) The amount fairly estimated as recoverable on cash
deposited in a closed bank or trust company, if qualifying
under the provisions of this Section prior to the suspension
of such bank or trust company.
(d) Bills and accounts receivable collateralized by
securities of the kind in which the company is authorized to
invest.
(e) Bills receivable not past due covering uncollected
premiums taken by a company in the transaction of business
described in Class 3 of Section 4, in an amount not to exceed
the unearned premium reserve liability calculated on each
respective policy.
(f) For in force insurance coverages written by fire,
casualty, and reciprocal companies, excluding group accident
and health business, premium deposits, gross premiums, and
agents' balances (net of related commissions) not more than
90 days past due; installments booked but deferred and not
yet due (net of related commissions), provided that all
amounts having become due from the insured are not more than
90 days past due; and audit and retrospective premium to the
extent permitted to be admitted pursuant to the Annual
Statement Instructions and the Accounting Practices and
Procedures Manual for Property and Casualty Insurers
published by the National Association of Insurance
Commissioners, unless the Director prescribes otherwise.
However, audit and retrospective premiums that represent
anticipated additional premiums on policies for which the
policy period has not yet expired may not be admitted.
(g) Net amount of uncollected premiums on group life and
group accident and health policies, not more than 90 days
past due.
(h) Due and uncollected accident and health premiums on
in force individual policies, on insurance written by Class
1, Section 4 companies, less commissions due thereon to
agents; not exceeding in the aggregate the premium reserve
liability computed on such business.
(i) Premium notes, policy loans and liens, and the net
amount of uncollected and deferred premiums on individual
life insurance policies, not in excess of the liability for
the legal reserves specified in Section 223 or 281 of this
Code on such individual life insurance policies.
(j) Premium and assessment notes, certificate loans and
liens, and the gross amount less loading, of premiums or
assessments actually collected by subordinate lodges not yet
turned over to the Supreme Lodge on individual life insurance
certificates not in excess of the liability for the legal
reserves specified in Section 297.1 or 305.1 on such
individual life insurance certificates.
(k) Mortuary assessments due and unpaid on last call
made within 60 days, on insurance in force and for which
notices have been issued, not in excess of the liability for
the unpaid claims which are to be paid by the proceeds.
(l) Amounts fairly estimated as recoverable from
advances made on contracts under surety bonds.
(m) Amounts receivable from insurance companies
authorized to do business in this State and from associations
or bureaus owned or controlled by 5 or more separate and
nonaffiliated, by ownership or management, insurance
companies of which a majority thereof are authorized to
transact business in this State. The amount of those
receivables allowed as admitted assets may not exceed the
lesser of 5% of the company's total admitted assets or 10% of
the company's surplus as regards policyholders. Amounts
receivable from insurance companies or associations or
bureaus not meeting the preceding standards of this Section
if collateralized in the manner prescribed by Section 173.1.
(n) Tax refunds due from the United States or any state,
the Government of Canada or any province, or the Commonwealth
of Puerto Rico or amounts due to a subsidiary from a parent
under a tax allocation agreement that conforms with rules
adopted by the Director.
(o) The interest accrued on mortgage loans conforming to
this Code, not exceeding an aggregate amount on an individual
loan of one year's total due and accrued interest.
(p) The rents accrued and owing to the company on real
and personal property, directly or beneficially owned, not
exceeding on each individual property the amount of one
year's total due and accrued rent.
(q) Interest or rents accrued on conditional sales
agreements, security interests, chattel mortgages and real or
personal property under lease to other corporations, all
conforming to this Code, and not exceeding on any individual
investment, the amount of one year's total due and accrued
interest or rent.
(r) The fixed and required interest due and accrued on
bonds and other like evidences of indebtedness, conforming to
this Code, and not in default.
(s) Dividends receivable on shares of stock conforming
to this Code; provided that the market price taken for
valuation purposes does not include the value of the
dividend.
(t) The interest or dividends due and payable, but not
credited, on deposits in banks and trust companies or on
accounts with savings and loan associations.
(u) Interest accrued on secured loans conforming to this
Code, not exceeding the amount of one year's interest on any
loan.
(v) Interest accrued on tax anticipation warrants.
(w) The value of electronic computer or data processing
machines or systems purchased for use in connection with the
business of the company, if such machines or systems whenever
purchased have an aggregate original cost to the company of
at least $75,000. The amortized value of such machines or
systems at the end of any calendar year shall not be greater
than the original purchase price less 10% for each completed
year, or pro rata portion for any fraction thereof, after
such purchase, with the total admissible value at any
statement date to be limited to an amount not exceeding 2% of
the company's admitted assets at such statement date.
(1) (x) Amounts, other than premium, receivable from
affiliates, not outstanding for more than 3 months, and
arising under, management contracts or service agreements
which meet the requirements of Section 141.1 of the Illinois
Insurance Code to the extent that the affiliate has liquid
assets sufficient to pay the balance. The amount of those
receivables included in admitted assets may not exceed the
lesser of 5% of the company's admitted assets or 10% of the
company's surplus as regards policyholders. For purposes of
this subsection, "affiliate" has the meaning given that term
in Article VIII 1/2 of the Illinois Insurance Code.
(2) Amounts permitted under Section 136.
(y) Property and liability guaranty fund or guaranty
association assessments paid in any state, but only to the
extent it is probable the company will be able to offset
those assessments against present or future premium taxes or
income taxes payable in the state in which the assessments
were paid. The amount of those assessments allowed as
admitted assets may not exceed the lesser of 5% of the
company's total admitted assets or 10% of the company's
surplus as regards policyholders. The Director may disallow
any such assessment as an admitted asset to the extent he
determines a company is unlikely to realize a present or
future premium tax or income tax offset as a result of the
assessment.
(Source: P.A. 89-97, eff. 7-7-95; 89-669, eff. 1-1-97;
90-418, eff. 8-15-97.)
(215 ILCS 5/35A-5)
Sec. 35A-5. Definitions. As used in this Article, the
terms listed in this Section have the meaning given herein.
"Adjusted RBC Report" means an RBC Report that has been
adjusted by the Director in accordance with subsection (f)
(e) of Section 35A-10.
"Authorized control level RBC" means the number
determined under the risk-based capital formula in accordance
with the RBC Instructions.
"Company action level RBC" means the product of 2.0 and
the insurer's authorized control level RBC.
"Corrective Order" means an order issued by the Director
in accordance with Article XII 1/2 specifying corrective
actions that the Director determines are required.
"Domestic insurer" means any insurance company domiciled
in this State under Article II, Article III, Article III 1/2,
or Article IV or a health organization as defined by this
Article, except this shall include only those health
maintenance organizations that are "domestic companies" in
accordance with Section 5-3 of the Health Maintenance
Organization Act and only those limited health service
organizations that are "domestic companies" in accordance
with Section 4003 of the Limited Health Service Organization
Act.
"Foreign insurer" means any foreign or alien insurance
company licensed under Article VI that is not domiciled in
this State and any health maintenance organization that is
not a "domestic company" in accordance with Section 5-3 of
the Health Maintenance Organization Act and any limited
health service organization that is not a "domestic company"
in accordance with Section 4003 of the Limited Health Service
Organization Act.
"Health organization" means an entity operating under a
certificate of authority issued pursuant to the Health
Maintenance Organization Act, the Dental Service Plan Act,
the Limited Health Service Organization Act, or the Voluntary
Health Services Plans Act, unless the entity is otherwise
defined as a "life, health, or life and health insurer"
pursuant to this Act.
"Life, health, or life and health insurer" means an
insurance company that has authority to transact the kinds of
insurance described in either or both clause (a) or clause
(b) of Class 1 of Section 4 or a licensed property and
casualty insurer writing only accident and health insurance.
"Mandatory control level RBC" means the product of 0.70
and the insurer's authorized control level RBC.
"NAIC" means the National Association of Insurance
Commissioners.
"Negative trend" means, with respect to a life, health,
or life and health insurer, a negative trend over a period of
time, as determined in accordance with the trend test
calculation included in the RBC Instructions.
"Property and casualty insurer" means an insurance
company that has authority to transact the kinds of insurance
in either or both Class 2 or Class 3 of Section 4 or a
licensed insurer writing only insurance authorized under
clause (c) of Class 1, but does not include monoline mortgage
guaranty insurers, financial guaranty insurers, and title
insurers.
"RBC" means risk-based capital.
"RBC Instructions" means the RBC Report including
risk-based capital instructions adopted by the NAIC as those
instructions may be amended by the NAIC from time to time in
accordance with the procedures adopted by the NAIC.
"RBC level" means an insurer's company action level RBC,
regulatory action level RBC, authorized control level RBC, or
mandatory control level RBC.
"RBC Plan" means a comprehensive financial plan
containing the elements specified in subsection (b) of
Section 35A-15.
"RBC Report" means the risk-based capital report required
under Section 35A-10.
"Receivership" means conservation, rehabilitation, or
liquidation under Article XIII.
"Regulatory action level RBC" means the product of 1.5
and the insurer's authorized control level RBC.
"Revised RBC Plan" means an RBC Plan rejected by the
Director and revised by the insurer with or without the
Director's recommendations.
"Total adjusted capital" means the sum of (1) an
insurer's statutory capital and surplus and (2) any other
items that the RBC Instructions may provide.
(Source: P.A. 89-97, eff. 7-7-95; 90-794, eff. 8-14-98.)
(215 ILCS 5/35A-10)
Sec. 35A-10. RBC Reports.
(a) On or before each March 1 (the "filing date"), every
domestic insurer shall prepare and submit to the Director a
report of its RBC levels as of the end of the previous
calendar year in the form and containing the information
required by the RBC Instructions. Every domestic insurer
shall also file its RBC Report with the NAIC in accordance
with the RBC Instructions. In addition, if requested in
writing by the chief insurance regulatory official of any
state in which it is authorized to do business, every
domestic insurer shall file its RBC Report with that official
no later than the later of 15 days after the insurer receives
the written request or the filing date.
(b) A life, health, or life and health insurer's RBC
shall be determined under the formula set forth in the RBC
Instructions. The formula shall take into account (and may
adjust for the covariance between):
(1) the risk with respect to the insurer's assets;
(2) the risk of adverse insurance experience with
respect to the insurer's liabilities and obligations;
(3) the interest rate risk with respect to the
insurer's business; and
(4) all other business risks and other relevant
risks set forth in the RBC Instructions.
These risks shall be determined in each case by applying the
factors in the manner set forth in the RBC Instructions.
(c) A property and casualty insurer's RBC shall be
determined in accordance with the formula set forth in the
RBC Instructions. The formula shall take into account (and
may adjust for the covariance between):
(1) asset risk;
(2) credit risk;
(3) underwriting risk; and
(4) all other business risks and other relevant
risks set forth in the RBC Instructions.
These risks shall be determined in each case by applying the
factors in the manner set forth in the RBC Instructions.
(d) A health organization's RBC shall be determined in
accordance with the formula set forth in the RBC
Instructions. The formula shall take the following into
account (and may adjust for the covariance between):
(1) asset risk;
(2) credit risk;
(3) underwriting risk; and
(4) all other business risks and other relevant
risks set forth in the RBC Instructions.
These risks shall be determined in each case by applying the
factors in the manner set forth in the RBC Instructions.
(e) (d) An excess of capital over the amount produced by
the risk-based capital requirements contained in this Code
and the formulas, schedules, and instructions referenced in
this Code is desirable in the business of insurance.
Accordingly, insurers should seek to maintain capital above
the RBC levels required by this Code. Additional capital is
used and useful in the insurance business and helps to secure
an insurer against various risks inherent in, or affecting,
the business of insurance and not accounted for or only
partially measured by the risk-based capital requirements
contained in this Code.
(f) (e) If a domestic insurer files an RBC Report that,
in the judgment of the Director, is inaccurate, the Director
shall adjust the RBC Report to correct the inaccuracy and
shall notify the insurer of the adjustment. The notice shall
contain a statement of the reason for the adjustment.
(Source: P.A. 88-364; 89-97, eff. 7-7-95.)
(215 ILCS 5/35A-15)
Sec. 35A-15. Company action level event.
(a) A company action level event means any of the
following events:
(1) The filing of an RBC Report by an insurer that
indicates that:
(A) the insurer's total adjusted capital is
greater than or equal to its regulatory action level
RBC, but less than its company action level RBC; or
(B) The insurer, if a life, health, or life
and health insurer, has total adjusted capital that
is greater than or equal to its company action level
RBC, but less than the product of its authorized
control level RBC and 2.5 and has a negative trend.
(2) The notification by the Director to the insurer
of an Adjusted RBC Report that indicates an event
described in paragraph (1), provided the insurer does not
challenge the Adjusted RBC Report under Section 35A-35.
(3) The notification by the Director to the insurer
that the Director has, after a hearing, rejected the
insurer's challenge under Section 35A-35 to an Adjusted
RBC Report that indicates the event described in
paragraph (1).
(b) In the event of a company action level event, the
insurer shall prepare and submit to the Director an RBC Plan
that does all of the following:
(1) Identifies the conditions that contribute to
the company action level event.
(2) Contains proposed corrective actions that the
insurer intends to take and that are expected to result
in the elimination of the company action level event. A
health organization is not prohibited from proposing
recognition of a parental guarantee or a letter of credit
to eliminate the company action level event; however the
Director shall, at his discretion, determine whether or
the extent to which the proposed parental guarantee or
letter of credit is an acceptable part of a satisfactory
RBC Plan or Revised RBC Plan.
(3) Provides projections of the insurer's financial
results in the current year and at least the 4 succeeding
years, both in the absence of proposed corrective actions
and giving effect to the proposed corrective actions,
including projections of statutory operating income, net
income, capital, and surplus. The projections for both
new and renewal business may include separate projections
for each major line of business and separately identify
each significant income, expense, and benefit component.
(4) Identifies the key assumptions affecting the
insurer's projections and the sensitivity of the
projections to the assumptions.
(5) Identifies the quality of, and problems
associated with, the insurer's business including, but
not limited to, its assets, anticipated business growth
and associated surplus strain, extraordinary exposure to
risk, mix of business, and use of reinsurance, if any, in
each case.
(c) The insurer shall submit the RBC Plan to the
Director within 45 days after the company action level event
occurs or within 45 days after the Director notifies the
insurer that the Director has, after a hearing, rejected its
challenge under Section 35A-35 to an Adjusted RBC Report.
(d) Within 60 days after an insurer submits an RBC Plan
to the Director, the Director shall notify the insurer
whether the RBC Plan shall be implemented or is, in the
judgment of the Director, unsatisfactory. If the Director
determines the RBC Plan is unsatisfactory, the notification
to the insurer shall set forth the reasons for the
determination and may set forth proposed revisions that will
render the RBC Plan satisfactory in the judgment of the
Director. Upon notification from the Director, the insurer
shall prepare a Revised RBC Plan, which may incorporate by
reference any revisions proposed by the Director. The
insurer shall submit the Revised RBC Plan to the Director
within 45 days after the Director notifies the insurer that
the RBC Plan is unsatisfactory or within 45 days after the
Director notifies the insurer that the Director has, after a
hearing, rejected its challenge under Section 35A-35 to the
determination that the RBC Plan is unsatisfactory.
(e) In the event the Director notifies an insurer that
its RBC Plan or Revised RBC Plan is unsatisfactory, the
Director may, at the Director's discretion and subject to the
insurer's right to a hearing under Section 35A-35, specify in
the notification that the notification constitutes a
regulatory action level event.
(f) Every domestic insurer that files an RBC Plan or
Revised RBC Plan with the Director shall file a copy of the
RBC Plan or Revised RBC Plan with the chief insurance
regulatory official in any state in which the insurer is
authorized to do business if that state has a law
substantially similar to the confidentiality provisions in
subsection (a) of Section 35A-50 and if that official
requests in writing a copy of the plan. The insurer shall
file a copy of the RBC Plan or Revised RBC Plan in that state
no later than the later of 15 days after receiving the
written request for the copy or the date on which the RBC
Plan or Revised RBC Plan is filed under subsection (c) or (d)
of this Section.
(Source: P.A. 88-364; 89-97, eff. 7-7-95.)
(215 ILCS 5/35A-20)
Sec. 35A-20. Regulatory action level event.
(a) A regulatory action level event means any of the
following events:
(1) The filing of an RBC Report by the insurer that
indicates that the insurer's total adjusted capital is
greater than or equal to its authorized control level
RBC, but less than its regulatory action level RBC.
(2) The notification by the Director to an insurer
of an Adjusted RBC Report that indicates the event
described in paragraph (1), provided the insurer does not
challenge the Adjusted RBC Report under Section 35A-35.
(3) The notification by the Director to the insurer
that the Director has, after a hearing, rejected the
insurer's challenge under Section 35A-35 to an Adjusted
RBC Report that indicates the event described in
paragraph (1).
(4) The failure of the insurer to file an RBC
Report by the filing date, unless the insurer has
provided an explanation for the failure that is
satisfactory to the Director and has cured the failure
within 10 days after the filing date.
(5) The failure of the insurer to submit an RBC
Plan to the Director within the time period set forth in
subsection (c) of Section 35A-15.
(6) The notification by the Director to the insurer
that the insurer's RBC Plan or revised RBC Plan is, in
the judgment of the Director, unsatisfactory and that the
notification constitutes a regulatory action level event
with respect to the insurer, provided the insurer does
not challenge the determination under Section 35A-35.
(7) The notification by the Director to the insurer
that the Director has, after a hearing, rejected the
insurer's challenge under Section 35A-35 to the
determination made by the Director under paragraph (6).
(8) The notification by the Director to the insurer
that the insurer has failed to adhere to its RBC Plan or
Revised RBC Plan, but only if that failure has a
substantial adverse effect on the ability of the insurer
to eliminate the company action level event in accordance
with its RBC Plan or Revised RBC Plan and the Director
has so stated in the notification, provided the insurer
does not challenge the determination under Section
35A-35.
(9) The notification by the Director to the insurer
that the Director has, after a hearing, rejected the
insurer's challenge under Section 35A-35 to the
determination made by the Director under paragraph (8).
(b) In the event of a regulatory action level event, the
Director shall do all of the following:
(1) Require the insurer to prepare and submit an
RBC Plan or, if applicable, a Revised RBC Plan to the
Director within 45 days after the regulatory action level
event occurs or within 45 days after the Director
notifies the insurer that the Director has, after a
hearing, rejected its challenge under Section 35A-35 to
either an Adjusted RBC Report or a Revised RBC Plan.
However, if the insurer previously prepared and submitted
an RBC Plan or a Revised RBC Plan in accordance with any
provision of this Article, the Director may determine
that the previously prepared RBC Plan or Revised RBC Plan
satisfies the requirement of this subsection (b)(1).
(2) Perform any examination or analysis of the
assets, liabilities, and operations of the insurer,
including a review of its RBC Plan or Revised RBC Plan,
that the Director deems necessary.
(3) After the examination or analysis, issue a
Corrective Order specifying the corrective actions the
Director determines are required.
(c) In determining corrective actions, the Director may
take into account any factors the Director deems relevant
based upon the examination or analysis of the assets,
liabilities, and operations of the insurer including, but not
limited to, the results of any sensitivity tests undertaken
under the RBC Instructions. The regulatory action level event
shall be deemed sufficient grounds for the Director to issue
a Corrective Order in accordance with Article XII 1/2. The
Director shall have rights, powers, and duties with respect
to the insurer that are set forth in Article XII 1/2 and the
insurer shall be entitled to the protections afforded
insurers under Article XII 1/2.
(d) The Director may retain actuaries, investment
experts, and other consultants necessary to review an
insurer's RBC Plan or Revised RBC Plan, examine or analyze
the assets, liabilities, and operations of the insurer, and
formulate the Corrective Order with respect to the insurer.
The fees, costs, and expenses related to the actuaries,
investment experts, and other consultants shall be reasonable
and customary for the nature of the services provided and
shall be borne by the affected insurer or the party
designated by the Director.
(Source: P.A. 89-97, eff. 7-7-95; 90-794, eff. 8-14-98.)
(215 ILCS 5/35A-30)
Sec. 35A-30. Mandatory control level event.
(a) A mandatory control level event means any of the
following events:
(1) The filing of an RBC Report that indicates that
the insurer's total adjusted capital is less than its
mandatory control level RBC.
(2) The notification by the Director to the insurer
of an Adjusted RBC Report that indicates the event
described in paragraph (1), provided the insurer does not
challenge the Adjusted RBC Report under Section 35A-35.
(3) The notification by the Director to the insurer
that the Director has, after a hearing, rejected the
insurer's challenge under Section 35A-35 to the Adjusted
RBC Report that indicates the event described in
paragraph (1).
(b) In the event of a mandatory control level event with
respect to a life, health, or life and health insurer, the
Director shall take actions necessary to place the insurer in
receivership under Article XIII. In that event, the
mandatory control level event shall be deemed sufficient
grounds for the Director to take action under Article XIII,
and the Director shall have the rights, powers, and duties
with respect to the insurer that are set forth in Article
XIII. If the Director takes action under this subsection
regarding an Adjusted RBC Report, the insurer shall be
entitled to the protections of Article XIII. If the Director
finds that there is a reasonable expectation that the
mandatory control level event may be eliminated within 90
days after it occurs, the Director may delay action for not
more than 90 days after the mandatory control level event.
(c) In the case of a mandatory control level event with
respect to a property and casualty insurer, the Director
shall take the actions necessary to place the insurer in
receivership under Article XIII or, in the case of an insurer
that is writing no business and that is running-off its
existing business, may allow the insurer to continue its
run-off under the supervision of the Director. In either
case, the mandatory control level event is deemed sufficient
grounds for the Director to take action under Article XIII,
and the Director has the rights, powers, and duties with
respect to the insurer that are set forth in Article XIII.
If the Director takes action regarding an Adjusted RBC
Report, the insurer shall be entitled to the protections of
Article XIII. If the Director finds that there is a
reasonable expectation that the mandatory control level event
may be eliminated within 90 days after it occurs, the
Director may delay action for not more than 90 days after the
mandatory control level event.
(d) In the case of a mandatory control level event with
respect to a health organization, the Director shall take the
actions necessary to place the insurer in receivership under
Article XIII or, in the case of an insurer that is writing no
business and that is running-off its existing business, may
allow the insurer to continue its run-off under the
supervision of the Director. In either case, the mandatory
control level event is deemed sufficient grounds for the
Director to take action under Article XIII, and the Director
has the rights, powers, and duties with respect to the
insurer that are set forth in Article XIII. If the Director
takes action regarding an Adjusted RBC Report, the insurer
shall be entitled to the protections of Article XIII. If the
Director finds that there is a reasonable expectation that
the mandatory control level event may be eliminated within 90
days after it occurs, the Director may delay action for not
more than 90 days after the mandatory control level event.
(Source: P.A. 88-364; 89-97, eff. 7-7-95.)
(215 ILCS 5/35A-55)
Sec. 35A-55. Provisions of Article supplemental;
exemptions.
(a) The provisions of this Article are supplemental to
the provisions of any other laws of this State and do not
preclude or limit other powers or duties of the Director
under any other laws.
(b) The Director may exempt from the application of this
Article any domestic property and casualty insurer that:
(1) writes direct business only in this State;
(2) writes direct annual premiums of $2,000,000 or
less; and
(3) assumes no reinsurance in excess of 5% of
direct premium written.
(c) The Director may exempt from the application of this
Article any company that is organized under Article IV of
this Code, that writes direct business only in this State,
and that assumes no reinsurance in excess of 5% of direct
written premiums.
(d) The Director may exempt from the application of this
Article any domestic health organization upon a showing by
the health organization of the reasons for requesting the
exemption and a determination by the Director of good cause
for an exemption.
(e) (d) The Director may by rule impose upon any insurer
exempted from the application of this Article under
subsection (b), or (c), or (d) of this Section conditions to
the exemption that require maintenance of adequate capital.
These conditions shall not exceed the requirements of this
Article.
(Source: P.A. 88-364; 89-97, eff. 7-7-95.)
(215 ILCS 5/35A-60)
Sec. 35A-60. Phase-in of Article.
(a) For RBC Reports filed with respect to the December
31, 1993 annual statement, instead of the provisions of
Sections 35A-15, 35A-20, 35A-25, and 35A-30, the following
provisions apply:
(1) In the event of a company action level event,
the Director shall take no action under this Article.
(2) In the event of a regulatory action level event
under paragraph (1), (2), or (3) of subsection (a) of
Section 35A-20, the Director shall take the actions
required under Section 35A-15.
(3) In the event of a regulatory action level event
under paragraph (4), (5), (6), (7), (8), or (9) of
subsection (a) of Section 35A-20 or an authorized control
level event, the Director shall take the actions required
under Section 35A-20.
(4) In the event of a mandatory control level
event, the Director shall take the actions required under
Section 35A-25.
(b) For RBC Reports required to be filed by property and
casualty insurers with respect to the December 31, 1995
annual statement, instead of the provisions of Section
35A-15, 35A-20, 35A-25, and 35A-30, the following provisions
apply:
(1) In the event of a company action level event
with respect to a domestic insurer, the Director shall
take no regulatory action under this Article.
(2) In the event of a an regulatory action level
event under paragraph (1), (2) or (3) of subsection (a)
of Section 35A-20, the Director shall take the actions
required under Section 35A-15.
(3) In the event of a an regulatory action level
event under paragraph (4), (5), (6), (7), (8), or (9) of
subsection (a) of Section 35A-20 or an authorized control
level event, the Director shall take the actions required
under Section 35A-20.
(4) In the event of a mandatory control level
event, the Director shall take the actions required under
Section 35A-25.
(c) For RBC Reports required to be filed by health
organizations with respect to the December 31, 1999 annual
statement and the December 31, 2000 annual statement, instead
of the provisions of Sections 35A-15, 35A-20, 35A-25, and
35A-30, the following provisions apply:
(1) In the event of a company action level event
with respect to a domestic insurer, the Director shall
take no regulatory action under this Article.
(2) In the event of a regulatory action level event
under paragraph (1), (2), or (3) of subsection (a) of
Section 35A-20, the Director shall take the actions
required under Section 35A-15.
(3) In the event of a regulatory action level event
under paragraph (4), (5), (6), (7), (8), or (9) of
subsection (a) of Section 35A-20 or an authorized control
level event, the Director shall take the actions required
under Section 35A-20.
(4) In the event of a mandatory control level
event, the Director shall take the actions required under
Section 35A-25.
This subsection does not apply to a health organization
that provides or arranges for a health care plan under which
enrollees may access health care services from contracted
providers without a referral from their primary care
physician.
Nothing in this subsection shall preclude or limit other
powers or duties of the Director under any other laws.
(Source: P.A. 88-364; 89-97, eff. 7-7-95.)
(215 ILCS 5/245) (from Ch. 73, par. 857)
Sec. 245. Salaries; pensions.
(1) No domestic life company shall directly or
indirectly pay any salary, compensation or emolument to any
officer, trustee or director thereof, or any salary,
compensation or emolument amounting in any year to more than
$200,000 $100,000 to any person, firm or corporation, unless
such payment be first authorized by a vote of the board of
directors of such company, which vote shall be duly recorded
in the records of the company. No such domestic life company
shall make any agreement with any of its officers, trustees
or salaried employees whereby it agrees that for any services
rendered or to be rendered he shall receive any salary,
compensation or emolument, directly or indirectly, that will
extend beyond a period of three years from the date of such
agreement except that payment of an amount not in excess of
20% of the salary of any of its officers, trustees, or
salaried employees may by written agreement be deferred
beyond such period of three years, which agreement may
include conditions to be met by such officer, trustee, or
salaried employee before payment will be made. The limitation
as to time contained herein shall not apply to a contract for
renewal commissions with any such officer, trustee or
salaried employee who is also an agent of the company nor
shall such limitation be construed as preventing a domestic
company from entering into contracts with its agents for the
payment of renewal commissions.
(2) No such life company shall grant any pension to any
officer, director or trustee thereof or to any member of his
family after his death except that it may provide a pension
pursuant to the terms of the uniform retirement plan adopted
by the board of directors and for any person who is or has
been a salaried officer or employee of such company and who
may retire by reason of age or disability.
(3) No such company shall hereafter create or establish
any account or fund for the purpose of promoting the health
or welfare of its employees except from annual accretions to
earned surplus computed in the manner provided by this Code.
Contributions to such fund by any company in any calendar
year shall not exceed 15% of the accretion to earned surplus
in such calendar year. Before such account or fund shall be
established, maintained or operated, the plan for such
account or fund and its method of operation shall be approved
by the board of directors of the company, and submitted to
the shareholders in the case of a stock company, or members
in the case of a mutual company, at a special meeting called
for the purpose of considering such plan. Contributions to
the fund from sources other than the company may be provided
for in the operation of the plan. No amount held in such fund
or account whether contributed by the company or from any
other source shall be considered an admitted asset as defined
in this Code, nor considered in determining the solvency of
such company, nor be subject to the provisions of this Code.
(Source: P.A. 86-384.)
(215 ILCS 5/356h) (from Ch. 73, par. 968h)
Sec. 356h. No individual or group policy of accident and
health insurance which covers the insured's immediate family
or children, as well as covering the insured, shall exclude a
child from coverage or limit coverage for a child solely
because the child is an adopted child, or solely because the
child does not reside with the insured. For purposes of this
Section, a child who is in the custody of the insured,
pursuant to an interim court order of adoption or, in the
case of group insurance, placement of adoption, whichever
comes first, vesting temporary care of the child in the
insured, is an adopted child, regardless of whether a final
order granting adoption is ultimately issued.
(Source: P.A. 86-649.)
(215 ILCS 5/356v)
Sec. 356v. Use of information derived from genetic
testing. After the effective date of this amendatory Act of
1997, an insurer must comply with the provisions of the
Genetic Information Privacy Act in connection with the
amendment, delivery, issuance, or renewal of, or claims for
or denial of coverage under, an individual or group policy of
accident and health insurance. Additionally, genetic
information shall not be treated as a condition described in
item (1) of subsection (A) of Section 20 of the Illinois
Health Insurance Portability and Accountability Act in the
absence of a diagnosis of the condition related to that
genetic information.
(Source: P.A. 90-25, eff. 1-1-98; 90-655, eff. 7-30-98.)
(215 ILCS 5/364) (from Ch. 73, par. 976)
Sec. 364. Discrimination prohibited. Discrimination
between individuals of the same class of risk in the issuance
of its policies or in the amount of premiums or rates charged
for any insurance covered by this article, or in the benefits
payable thereon, or in any of the terms or conditions of such
policy, or in any other manner whatsoever is prohibited.
Nothing in this provision shall prohibit an insurer from
providing incentives for insureds to utilize the services of
a particular hospital or person. It is hereby expressly
provided that whenever the terms "physician" or "doctor"
appear or are used in any way in any policy of accident or
health insurance issued in this state, said terms shall
include within their meaning persons licensed to practice
dentistry under the Illinois Dental Practice Act with regard
to benefits payable for services performed by a person so
licensed, which such services are within the coverage
provided by the particular policy or contract of insurance
and are within the professional services authorized to be
performed by such person under and in accordance with the
said Act.
No company, in any policy of accident or health insurance
issued in this State, shall make or permit any distinction or
discrimination against individuals solely because of
handicaps or disabilities in the amount of payment of
premiums or rates charged for policies of insurance, in the
amount of any dividends or other benefits payable thereon, or
in any other terms and conditions of the contract it makes,
except where the distinction or discrimination is based on
sound actuarial principles or is related to actual or
reasonably anticipated experience.
No company shall refuse to insure, or refuse to continue
to insure, or limit the amount or extent or kind of coverage
available to an individual, or charge an individual a
different rate for the same coverage solely because of
blindness or partial blindness. With respect to all other
conditions, including the underlying cause of the blindness
or partial blindness, persons who are blind or partially
blind shall be subject to the same standards of sound
actuarial principles or actual or reasonably anticipated
experience as are sighted persons. Refusal to insure includes
denial by an insurer of disability insurance coverage on the
grounds that the policy defines "disability" as being
presumed in the event that the insured loses his or her
eyesight. However, an insurer may exclude from coverage
disabilities consisting solely of blindness or partial
blindness when such condition existed at the time the policy
was issued.
(Source: P.A. 85-1209.)
(215 ILCS 5/367) (from Ch. 73, par. 979)
Sec. 367. Group accident and health insurance.
(1) Group accident and health insurance is hereby
declared to be that form of accident and health insurance
covering not less than 2 10 employees, members, or employees
of members, (except in case of volunteer fire departments the
number shall not be less than 5 members) written under a
master policy issued to any governmental corporation, unit,
agency or department thereof, or to any corporation,
copartnership, individual employer, or to any association
upon application of an executive officer or trustee of such
association having a constitution or bylaws and formed in
good faith for purposes other than that of obtaining
insurance, where officers, members, employees, employees of
members or classes or department thereof, may be insured for
their individual benefit. In addition a group accident and
health policy may be written to insure any group which may be
insured under a group life insurance policy. The term
"employees" shall include the officers, managers and
employees of subsidiary or affiliated corporations, and the
individual proprietors, partners and employees of affiliated
individuals and firms, when the business of such subsidiary
or affiliated corporations, firms or individuals, is
controlled by a common employer through stock ownership,
contract or otherwise.
(2) Any insurance company authorized to write accident
and health insurance in this State shall have power to issue
group accident and health policies. No policy of group
accident and health insurance may be issued or delivered in
this State unless a copy of the form thereof shall have been
filed with the department and approved by it in accordance
with Section 355, and it contains in substance those
provisions contained in Sections 357.1 through 357.30 as may
be applicable to group accident and health insurance and the
following provisions:
(a) A provision that the policy, the application of
the employer, or executive officer or trustee of any
association, and the individual applications, if any, of
the employees, members or employees of members insured
shall constitute the entire contract between the parties,
and that all statements made by the employer, or the
executive officer or trustee, or by the individual
employees, members or employees of members shall (in the
absence of fraud) be deemed representations and not
warranties, and that no such statement shall be used in
defense to a claim under the policy, unless it is
contained in a written application.
(b) A provision that the insurer will issue to the
employer, or to the executive officer or trustee of the
association, for delivery to the employee, member or
employee of a member, who is insured under such policy,
an individual certificate setting forth a statement as to
the insurance protection to which he is entitled and to
whom payable.
(c) A provision that to the group or class thereof
originally insured shall be added from time to time all
new employees of the employer, members of the association
or employees of members eligible to and applying for
insurance in such group or class.
(3) Anything in this code to the contrary
notwithstanding, any group accident and health policy may
provide that all or any portion of any indemnities provided
by any such policy on account of hospital, nursing, medical
or surgical services, may, at the insurer's option, be paid
directly to the hospital or person rendering such services;
but the policy may not require that the service be rendered
by a particular hospital or person. Payment so made shall
discharge the insurer's obligation with respect to the amount
of insurance so paid. Nothing in this subsection (3) shall
prohibit an insurer from providing incentives for insureds to
utilize the services of a particular hospital or person.
(4) Special group policies may be issued to school
districts providing medical or hospital service, or both, for
pupils of the district injured while participating in any
athletic activity under the jurisdiction of or sponsored or
controlled by the district or the authorities of any school
thereof. The provisions of this Section governing the
issuance of group accident and health insurance shall,
insofar as applicable, control the issuance of such policies
issued to schools.
(5) No policy of group accident and health insurance may
be issued or delivered in this State unless it provides that
upon the death of the insured employee or group member the
dependents' coverage, if any, continues for a period of at
least 90 days subject to any other policy provisions relating
to termination of dependents' coverage.
(6) No group hospital policy covering miscellaneous
hospital expenses issued or delivered in this State shall
contain any exception or exclusion from coverage which would
preclude the payment of expenses incurred for the processing
and administration of blood and its components.
(7) No policy of group accident and health insurance,
delivered in this State more than 120 days after the
effective day of the Section, which provides inpatient
hospital coverage for sicknesses shall exclude from such
coverage the treatment of alcoholism. This subsection shall
not apply to a policy which covers only specified sicknesses.
(8) No policy of group accident and health insurance,
which provides benefits for hospital or medical expenses
based upon the actual expenses incurred, issued or delivered
in this State shall contain any specific exception to
coverage which would preclude the payment of actual expenses
incurred in the examination and testing of a victim of an
offense defined in Sections 12-13 through 12-16 of the
Criminal Code of 1961, or an attempt to commit such offense,
to establish that sexual contact did occur or did not occur,
and to establish the presence or absence of sexually
transmitted disease or infection, and examination and
treatment of injuries and trauma sustained by the victim of
such offense, arising out of the offense. Every group policy
of accident and health insurance which specifically provides
benefits for routine physical examinations shall provide full
coverage for expenses incurred in the examination and testing
of a victim of an offense defined in Sections 12-13 through
12-16 of the Criminal Code of 1961, or an attempt to commit
such offense, as set forth in this Section. This subsection
shall not apply to a policy which covers hospital and medical
expenses for specified illnesses and injuries only.
(9) For purposes of enabling the recovery of State
funds, any insurance carrier subject to this Section shall
upon reasonable demand by the Department of Public Health
disclose the names and identities of its insureds entitled to
benefits under this provision to the Department of Public
Health whenever the Department of Public Health has
determined that it has paid, or is about to pay, hospital or
medical expenses for which an insurance carrier is liable
under this Section. All information received by the
Department of Public Health under this provision shall be
held on a confidential basis and shall not be subject to
subpoena and shall not be made public by the Department of
Public Health or used for any purpose other than that
authorized by this Section.
(10) Whenever the Department of Public Health finds that
it has paid all or part of any hospital or medical expenses
which an insurance carrier is obligated to pay under this
Section, the Department of Public Health shall be entitled to
receive reimbursement for its payments from such insurance
carrier provided that the Department of Public Health has
notified the insurance carrier of its claim before the
carrier has paid the benefits to its insureds or the
insureds' assignees.
(11) (a) No group hospital, medical or surgical expense
policy shall contain any provision whereby benefits
otherwise payable thereunder are subject to reduction
solely on account of the existence of similar benefits
provided under other group or group-type accident and
sickness insurance policies where such reduction would
operate to reduce total benefits payable under these
policies below an amount equal to 100% of total allowable
expenses provided under these policies.
(b) When dependents of insureds are covered under 2
policies, both of which contain coordination of benefits
provisions, benefits of the policy of the insured whose
birthday falls earlier in the year are determined before
those of the policy of the insured whose birthday falls
later in the year. Birthday, as used herein, refers only
to the month and day in a calendar year, not the year in
which the person was born. The Department of Insurance
shall promulgate rules defining the order of benefit
determination pursuant to this paragraph (b).
(12) Every group policy under this Section shall be
subject to the provisions of Sections 356g and 356n of this
Code.
(13) No accident and health insurer providing coverage
for hospital or medical expenses on an expense incurred basis
shall deny reimbursement for an otherwise covered expense
incurred for any organ transplantation procedure solely on
the basis that such procedure is deemed experimental or
investigational unless supported by the determination of the
Office of Health Care Technology Assessment within the Agency
for Health Care Policy and Research within the federal
Department of Health and Human Services that such procedure
is either experimental or investigational or that there is
insufficient data or experience to determine whether an organ
transplantation procedure is clinically acceptable. If an
accident and health insurer has made written request, or had
one made on its behalf by a national organization, for
determination by the Office of Health Care Technology
Assessment within the Agency for Health Care Policy and
Research within the federal Department of Health and Human
Services as to whether a specific organ transplantation
procedure is clinically acceptable and said organization
fails to respond to such a request within a period of 90
days, the failure to act may be deemed a determination that
the procedure is deemed to be experimental or
investigational.
(14) Whenever a claim for benefits by an insured under a
dental prepayment program is denied or reduced, based on the
review of x-ray films, such review must be performed by a
dentist.
(Source: P.A. 89-187, eff. 7-19-95.)
(215 ILCS 5/367i) (from Ch. 73, par. 979i)
Sec. 367i. Discontinuance and replacement of coverage.
Group health insurance policies issued, amended, delivered or
renewed on and after the effective date of this amendatory
Act of 1989, shall provide a reasonable extension of benefits
in the event of total disability on the date the policy is
discontinued for any reason.
Any applicable extension of benefits or accrued liability
shall be described in the policy and group certificate.
Benefits payable during any extension of benefits may be
subject to the policy's regular benefit limits.
Any insurer discontinuing a group health insurance policy
shall provide to the policyholder for delivery to covered
employees or members a notice as to the date such
discontinuation is to be effective and urging them to refer
to their group certificates to determine what contract
rights, if any, are available to them.
In the event a discontinued policy is replaced by another
group policy, the prior insurer or plan shall be liable only
to the extent of its accrued liabilities and extension of
benefits. Persons eligible for coverage under the succeeding
insurer's plan or policy shall include all employees and
dependents covered under the prior insurer's plan, including
disabled individuals covered under the prior plan but absent
from work on the effective date and thereafter. The prior
insurer shall provide extension of benefits for an insured's
disabling condition when no coverage is available under the
succeeding insurer's plan whether due to the absence of
coverage in the contract or lack of required creditable
coverage for a preexisting condition. be covered by that
policy. Persons not eligible for coverage under the
succeeding insurer's policy shall, until such time as such
person becomes eligible, be covered by the succeeding
insurer's policy in such a way as to ensure that such persons
shall be treated no less favorably than had the change in
insurers not occurred.
The Director shall promulgate reasonable rules as
necessary to carry out this Section.
(Source: P.A. 86-537.)
Section 10. The Dental Service Plan Act is amended by
changing Section 25 as follows:
(215 ILCS 110/25) (from Ch. 32, par. 690.25)
Sec. 25. Application of Insurance Code provisions.
Dental service plan corporations and all persons interested
therein or dealing therewith shall be subject to the
provisions of Articles IIA and Article XII 1/2 and Sections
3.1, 133, 140, 143, 143c, 149, 355.2, 367.2, 401, 401.1, 402,
403, 403A, 408, 408.2, and 412, and subsection (15) of
Section 367 of the Illinois Insurance Code.
(Source: P.A. 86-600; 87-587; 87-1090.)
Section 15. The Health Maintenance Organization Act is
amended by changing Sections 1-3, 2-7, 4-9, and 5-3 as
follows:
(215 ILCS 125/1-3) (from Ch. 111 1/2, par. 1402.1)
Sec. 1-3. Definitions of admitted assets. "Admitted
Assets" includes the investments authorized or permitted by
Section 3-1 of this Act and, in addition thereto, only the
following:
(a) Petty cash and other cash funds in the
organization's principal or any official branch office and
under the control of the organization.
(b) Immediately withdrawable funds on deposit in demand
accounts, in a bank or trust company as defined in paragraph
(3) of subsection (g) of Section 3-1 or like funds actually
in the principal or any official branch office at statement
date, and, in transit to such bank or trust company with
authentic deposit credit given prior to the close of business
on the fifth bank working day following the statement date.
(c) The amount fairly estimated as recoverable on cash
deposited in a closed bank or trust company, if qualifying
under the provisions of this Sec. prior to the suspension of
such bank or trust company.
(d) Bills and accounts receivable collateralized by
securities of the kind in which the organization is
authorized to invest.
(e) Premiums receivable from groups or individuals which
are not more than 60 days past due. Premiums receivable from
the United States, any state thereof or any political
subdivision of either which is not more than 90 days past
due.
(f) Amounts due under insurance policies or reinsurance
arrangements from insurance companies authorized to do
business in this State.
(g) Tax refunds due from the United States, any state or
any political subdivision thereof.
(h) The interest accrued on mortgage loans conforming to
Section 3-1 of this Act, not exceeding in aggregate amount on
an individual loan of one year's total due and accrued
interest.
(i) The rents accrued and owing to the organization on
real and personal property, directly or beneficially owned,
not exceeding on each individual property the amount of one
year's total due and accrued rent.
(j) Interest or rents accrued on conditional sales
agreements, security interests, chattel mortgages and real or
personal property under lease to other corporations, all
conforming to Section 3-1 of this Act, and not exceeding on
any individual investment, the amount of one year's total due
and accrued interest or rent.
(k) The fixed and required interest due and accrued on
bonds and other like evidences of indebtedness, conforming to
Section 3-1 of this Act, and not in default.
(l) Dividends receivable on shares of stock conforming
to Section 3-1 of this Act; provided that the market price
taken for valuation purposes does not include the value of
the dividend.
(m) The interest or dividends due and payable, but not
credited, on deposits in banks and trust companies or on
accounts with savings and loan associations.
(n) Interest accrued on secured loans conforming to this
Act, not exceeding the amount of one year's interest on any
loan.
(o) Interest accrued on tax anticipation warrants.
(p) The amortized value of electronic computer or data
processing machines or systems purchased for use in
connection with the business of the organization, including
software purchased and developed specifically for the
organization's use and purposes.
(q) The cost of furniture, equipment and medical
equipment, less accumulated depreciation thereon, and
medical and pharmaceutical supplies that are used in the
delivery of health care and under the control of the
organization, provided such assets do not exceed 30% of
admitted assets.
(1) (r) Amounts due from affiliates pursuant to
management contracts or service agreements which meet the
requirements of Section 141.1 of the Illinois Insurance Code
to the extent that the affiliate has liquid assets with which
to pay the balance and maintain its accounts on a current
basis; provided that the aggregate amount due from affiliates
may not exceed the lesser of 10% of the organization's
admitted assets or 25% of the organization's net worth as
defined in Section 3-1. Any amount outstanding more than 3
months shall be deemed not current. For purpose of this
subsection "affiliates" are as defined in Article VIII 1/2 of
the Illinois Insurance Code.
(s) Intangible assets, including, but not limited to,
organization goodwill and purchased goodwill, to the extent
reported in the most recent annual or quarterly financial
statement filed with the Director preceding the effective
date of this Amendatory Act of 1987. However, such assets
shall be amortized, by the straight-line method, to a value
of zero no later than December 31, 1990; provided, however,
that no organization shall be required pursuant to the
foregoing provision to amortize such assets in an amount
greater than $300,000 in any one year, and in cases where
amortization of such assets by December 31, 1990 would
otherwise require amortization of an annual amount in excess
of $300,000, the organization shall be required only to
amortize such assets at a rate of $300,000 per year until all
such assets have been amortized to a value of zero, unless
the continuation of the current amortization schedule would
result in an earlier zero value, in which case the current
amortization schedule shall be applied.
(t) Amounts due from patients or enrollees for health
care services rendered which are not more than 60 days past
due.
(2) (u) Amounts advanced to providers under contract to
the organization for services to be rendered to enrollees
pursuant to the contract. Amounts advanced must be for
period of not more than 3 months and must be based on
historical or estimated utilization patterns with the
provider and must be reconciled against actual incurred
claims at least semi-annually. Amounts due in the aggregate
may not exceed 50% of the organization's net worth as defined
in Section 3-1. Amounts due from a single provider may not
exceed the lesser of 5% of the organization's admitted assets
or 10% of the organization's net worth.
(3) Amounts permitted under Section 2-7.
(v) Cost reimbursement due from the Health Care
Financing Administration for furnishing covered medicare
services to medicare enrollees which are not more than twelve
months past due.
(w) Prepaid rent or lease payments no greater than 3
months in advance, on real property used for the
administration of the organizations business or for the
delivery of medical care.
(Source: P.A. 88-364; revised 10-31-98.)
(215 ILCS 125/2-7) (from Ch. 111 1/2, par. 1407)
Sec. 2-7. Annual statement; audited financial reports
enrollment projections and budget filings.
(a) A health maintenance organization shall file with
the Director by March 1st in each year 2 copies of its
financial statement for the year ending December 31st
immediately preceding on forms prescribed by the Director,
which shall conform substantially to the form of statement
adopted by the National Association of Insurance
Commissioners. Unless the Director provides otherwise, the
annual statement is to be prepared in accordance with the
annual statement instructions and the Accounting Practices
and Procedures Manual adopted by the National Association of
Insurance Commissioners. The Director shall have power to
make such modifications and additions in this form as he may
deem desirable or necessary to ascertain the condition and
affairs of the organization. The Director shall have
authority to extend the time for filing any statement by any
organization for reasons which he considers good and
sufficient. The statement shall be verified by oaths of the
president and secretary of the organization or, in their
absence, by 2 other principal officers. In addition, any
organization may be required by the Director, when he
considers that action to be necessary and appropriate for the
protection of enrollees, creditors, shareholders,
subscribers, or claimants, to file, within 60 days after
mailing to the organization a notice that such is required, a
supplemental summary statement as of the last day of any
calendar month occurring during the 100 days next preceding
the mailing of such notice designated by him on forms
prescribed and furnished by the Director. The Director may
require supplemental summary statements to be certified by an
independent actuary deemed competent by the Director or by an
independent certified public accountant. Every Health
Maintenance Organization shall annually, on or before the
first day of March, file 2 original copies of its annual
statement with the Director verified by at least two
principal officers, covering the two preceding calendar
years. Such annual statement shall be on forms prescribed by
the Director and shall include: (1) financial statements of
the organization; (2) the number of persons enrolled during
the year, the number of enrollees at the end of the year and
the number of enrollments terminated during the year; and (3)
such other information relating to the performance of the
Health Maintenance Organization as is necessary to enable the
Director to carry out his duties under this Act.
Any organization failing, without just cause, to file its
annual statement as required in this Act shall be required,
after notice and hearing, to pay a penalty of $100 for each
day's delay, to be recovered by the Director of Insurance of
the State of Illinois and the penalty so recovered shall be
paid into the General Revenue Fund of the State of Illinois.
The Director may reduce the penalty if the company
demonstrates to the Director that the imposition of the
penalty would constitute a financial hardship to the
organization.
An annual statement which is not materially complete when
filed shall not be considered to have been properly filed
until those deficiencies which make the filing incomplete
have been corrected and file.
(b) Audited financial reports shall be filed on or
before June 1 of each year for the two calendar years
immediately preceding and shall provide an opinion expressed
by an independent certified public accountant on the
accompanying financial statement of the Health Maintenance
Organization and a detailed reconciliation for any
differences between the accompanying financial statements and
each of the related financial statements filed in accordance
with subsection (a) of this Section. Any organization
failing, without just cause, to file the annual audited
financial statement as required in this Act shall be
required, after the notice and hearing, to pay a penalty of
$100 for each day's delay, to be recovered by the Director of
Insurance of the State of Illinois and the penalty so
recovered shall be paid into the General Revenue Fund of the
State of Illinois. The Director may reduce the penalty if
the organization demonstrates to the Director that the
imposition of the penalty would constitute a financial
hardship to the organization.
(c) The Director may require that additional summary
financial information be filed no more often than 3 times per
year on reporting forms provided by him. However, he may
request certain key information on a more frequent basis if
necessary for a determination of the financial viability of
the organization.
(d) The Director shall have the authority to extend the
time for filing any statement by any organization for reasons
which the Director considers good and sufficient.
(Source: P.A. 85-20; revised 10-31-98.)
(215 ILCS 125/4-9) (from Ch. 111 1/2, par. 1409.2)
Sec. 4-9. Adopted children. No contract or evidence of
coverage issued by a Health Maintenance Organization which
provides for coverage of dependents of the principal
enrollees shall exclude a child from coverage or eligibility
for coverage or limit coverage for a child solely on the
basis that he or she is an adopted child. For purposes of
this Section, a child who is in the custody of a principal
enrollee, pursuant to an interim court order of adoption or,
in the case of group insurance, placement of adoption,
whichever comes first, vesting temporary care of the child in
the enrollee, is an adopted child, regardless of whether a
final order granting adoption is ultimately issued.
(Source: P.A. 86-620.)
(215 ILCS 125/5-3) (from Ch. 111 1/2, par. 1411.2)
Sec. 5-3. Insurance Code provisions.
(a) Health Maintenance Organizations shall be subject to
the provisions of Sections 133, 134, 137, 140, 141.1, 141.2,
141.3, 143, 143c, 147, 148, 149, 151, 152, 153, 154, 154.5,
154.6, 154.7, 154.8, 155.04, 355.2, 356m, 356v, 356w, 356x,
367i, 401, 401.1, 402, 403, 403A, 408, 408.2, 409, 412, 444,
and 444.1, paragraph (c) of subsection (2) of Section 367,
and Articles IIA, VIII 1/2, XII, XII 1/2, XIII, XIII 1/2,
XXV, and XXVI of the Illinois Insurance Code.
(b) For purposes of the Illinois Insurance Code, except
for Sections 444 and 444.1 and Articles XIII and XIII 1/2,
Health Maintenance Organizations in the following categories
are deemed to be "domestic companies":
(1) a corporation authorized under the Dental
Service Plan Act or the Voluntary Health Services Plans
Act;
(2) a corporation organized under the laws of this
State; or
(3) a corporation organized under the laws of
another state, 30% or more of the enrollees of which are
residents of this State, except a corporation subject to
substantially the same requirements in its state of
organization as is a "domestic company" under Article
VIII 1/2 of the Illinois Insurance Code.
(c) In considering the merger, consolidation, or other
acquisition of control of a Health Maintenance Organization
pursuant to Article VIII 1/2 of the Illinois Insurance Code,
(1) the Director shall give primary consideration
to the continuation of benefits to enrollees and the
financial conditions of the acquired Health Maintenance
Organization after the merger, consolidation, or other
acquisition of control takes effect;
(2)(i) the criteria specified in subsection (1)(b)
of Section 131.8 of the Illinois Insurance Code shall not
apply and (ii) the Director, in making his determination
with respect to the merger, consolidation, or other
acquisition of control, need not take into account the
effect on competition of the merger, consolidation, or
other acquisition of control;
(3) the Director shall have the power to require
the following information:
(A) certification by an independent actuary of
the adequacy of the reserves of the Health
Maintenance Organization sought to be acquired;
(B) pro forma financial statements reflecting
the combined balance sheets of the acquiring company
and the Health Maintenance Organization sought to be
acquired as of the end of the preceding year and as
of a date 90 days prior to the acquisition, as well
as pro forma financial statements reflecting
projected combined operation for a period of 2
years;
(C) a pro forma business plan detailing an
acquiring party's plans with respect to the
operation of the Health Maintenance Organization
sought to be acquired for a period of not less than
3 years; and
(D) such other information as the Director
shall require.
(d) The provisions of Article VIII 1/2 of the Illinois
Insurance Code and this Section 5-3 shall apply to the sale
by any health maintenance organization of greater than 10% of
its enrollee population (including without limitation the
health maintenance organization's right, title, and interest
in and to its health care certificates).
(e) In considering any management contract or service
agreement subject to Section 141.1 of the Illinois Insurance
Code, the Director (i) shall, in addition to the criteria
specified in Section 141.2 of the Illinois Insurance Code,
take into account the effect of the management contract or
service agreement on the continuation of benefits to
enrollees and the financial condition of the health
maintenance organization to be managed or serviced, and (ii)
need not take into account the effect of the management
contract or service agreement on competition.
(f) Except for small employer groups as defined in the
Small Employer Rating, Renewability and Portability Health
Insurance Act and except for medicare supplement policies as
defined in Section 363 of the Illinois Insurance Code, a
Health Maintenance Organization may by contract agree with a
group or other enrollment unit to effect refunds or charge
additional premiums under the following terms and conditions:
(i) the amount of, and other terms and conditions
with respect to, the refund or additional premium are set
forth in the group or enrollment unit contract agreed in
advance of the period for which a refund is to be paid or
additional premium is to be charged (which period shall
not be less than one year); and
(ii) the amount of the refund or additional premium
shall not exceed 20% of the Health Maintenance
Organization's profitable or unprofitable experience with
respect to the group or other enrollment unit for the
period (and, for purposes of a refund or additional
premium, the profitable or unprofitable experience shall
be calculated taking into account a pro rata share of the
Health Maintenance Organization's administrative and
marketing expenses, but shall not include any refund to
be made or additional premium to be paid pursuant to this
subsection (f)). The Health Maintenance Organization and
the group or enrollment unit may agree that the
profitable or unprofitable experience may be calculated
taking into account the refund period and the immediately
preceding 2 plan years.
The Health Maintenance Organization shall include a
statement in the evidence of coverage issued to each enrollee
describing the possibility of a refund or additional premium,
and upon request of any group or enrollment unit, provide to
the group or enrollment unit a description of the method used
to calculate (1) the Health Maintenance Organization's
profitable experience with respect to the group or enrollment
unit and the resulting refund to the group or enrollment unit
or (2) the Health Maintenance Organization's unprofitable
experience with respect to the group or enrollment unit and
the resulting additional premium to be paid by the group or
enrollment unit.
In no event shall the Illinois Health Maintenance
Organization Guaranty Association be liable to pay any
contractual obligation of an insolvent organization to pay
any refund authorized under this Section.
(Source: P.A. 89-90, eff. 6-30-95; 90-25, eff. 1-1-98;
90-177, eff. 7-23-97; 90-372, eff. 7-1-98; 90-583, eff.
5-29-98; 90-655, eff. 7-30-98; 90-741, eff. 1-1-99; revised
9-8-98.)
Section 20. The Limited Health Service Organization Act
is amended by changing Sections 2007 and 4003 as follows:
(215 ILCS 130/2007) (from Ch. 73, par. 1502-7)
Sec. 2007. Annual statement; audited financial reports;
enrollment projections and budget; filings.
(a) A limited health service organization shall file
with the Director by March 1st in each year 2 copies of its
financial statement for the year ending December 31st
immediately preceding on forms prescribed by the Director,
which shall conform substantially to the form of statement
adopted by the National Association of Insurance
Commissioners. Unless the Director provides otherwise, the
annual statement is to be prepared in accordance with the
annual statement instructions and the Accounting Practices
and Procedures Manual adopted by the National Association of
Insurance Commissioners. The Director shall have power to
make such modifications and additions in this form as he may
deem desirable or necessary to ascertain the condition and
affairs of the organization. The Director shall have
authority to extend the time for filing any statement by any
organization for reasons which he considers good and
sufficient. The statement shall be verified by oaths of the
president and secretary of the organization or, in their
absence, by 2 other principal officers. In addition, any
organization may be required by the Director, when he
considers that action to be necessary and appropriate for the
protection of enrollees, creditors, shareholders,
subscribers, or claimants, to file, within 60 days after
mailing to the organization a notice that such is required, a
supplemental summary statement as of the last day of any
calendar month occurring during the 100 days next preceding
the mailing of such notice designated by him on forms
prescribed and furnished by the Director. The Director may
require supplemental summary statements to be certified by an
independent actuary deemed competent by the Director or by an
independent certified public accountant. Every limited health
service organization shall annually, on or before the first
day of March, file 2 original copies of its annual statement
with the Director verified by at least 2 principal officers,
covering the 2 preceding calendar years. Such annual
statement shall be on forms prescribed by the Director and
shall include:
(1) the financial statements of the organization;
(2) the number of persons enrolled during the year,
the number of enrollees at the end of the year and the
number of enrollments terminated during the year; and
(3) such other information relating to the
performance of the limited health service organization as
the Director deems necessary to enable the Director to
carry out his duties under this Act.
Any organization failing, without just cause, to file its
annual statement as required in this Act shall be required,
after notice and opportunity for hearing, to pay a penalty of
$100 for each day's delay, to be recovered by the Director of
Insurance. The penalty so recovered shall be paid into the
General Revenue Fund of the State of Illinois. The Director
may reduce the penalty if the organization demonstrates to
the Director that the imposition of the penalty would
constitute a financial hardship to the organization.
An annual statement which is not materially complete when
filed shall not be considered to have been properly filed
until those deficiencies which make the filing incomplete
have been corrected and filed.
(b) Audited financial reports shall be filed on or
before June 1 of each year for the 2 calendar years
immediately preceding and shall provide an opinion expressed
by an independent certified public accountant on the
accompanying financial statement of the limited health
service organization and detailed reconciliation for any
differences between the accompanying financial statements and
each of the related financial statements filed in accordance
with subsection (a) of this Section. Any organization
failing, without just cause, to file the annual audited
financial statement as required in this Act shall be
required, after the notice and opportunity for hearing, to
pay a penalty of $100 for each day's delay, to be recovered
by the Director of Insurance. The penalty so recovered shall
be paid into the General Revenue Fund of the State of
Illinois. The Director may reduce the penalty if the
organization demonstrates to the Director that the imposition
of the penalty would constitute a financial hardship to the
organization.
(c) The Director may require that additional summary
financial information be filed no more often than 3 times per
year on reporting forms provided by him. However, he may
request certain key information on a more frequent basis if
necessary for a determination of the financial viability of
the organization.
(d) The Director shall have the authority to extend the
time for filing any statements by an organization for reasons
which the Director considers good and sufficient.
(Source: P.A. 86-600.)
(215 ILCS 130/4003) (from Ch. 73, par. 1504-3)
Sec. 4003. Illinois Insurance Code provisions. Limited
health service organizations shall be subject to the
provisions of Sections 133, 134, 137, 140, 141.1, 141.2,
141.3, 143, 143c, 147, 148, 149, 151, 152, 153, 154, 154.5,
154.6, 154.7, 154.8, 155.04, 355.2, 356v, 401, 401.1, 402,
403, 403A, 408, 408.2, 409, 412, 444, and 444.1 and Articles
IIA, VIII 1/2, XII, XII 1/2, XIII, XIII 1/2, XXV, and XXVI of
the Illinois Insurance Code. For purposes of the Illinois
Insurance Code, except for Sections 444 and 444.1 and
Articles XIII and XIII 1/2, limited health service
organizations in the following categories are deemed to be
domestic companies:
(1) a corporation under the laws of this State; or
(2) a corporation organized under the laws of
another state, 30% of more of the enrollees of which are
residents of this State, except a corporation subject to
substantially the same requirements in its state of
organization as is a domestic company under Article VIII
1/2 of the Illinois Insurance Code.
(Source: P.A. 90-25, eff. 1-1-98; 90-583, eff. 5-29-98;
90-655, eff. 7-30-98.)
Section 25. The Voluntary Health Services Plans Act is
amended by changing Section 10 as follows:
(215 ILCS 165/10) (from Ch. 32, par. 604)
Sec. 10. Application of Insurance Code provisions.
Health services plan corporations and all persons interested
therein or dealing therewith shall be subject to the
provisions of Articles IIA and Article XII 1/2 and Sections
3.1, 133, 140, 143, 143c, 149, 354, 355.2, 356r, 356t, 356u,
356v, 356w, 356x, 367.2, 401, 401.1, 402, 403, 403A, 408,
408.2, and 412, and paragraphs (7) and (15) of Section 367 of
the Illinois Insurance Code.
(Source: P.A. 89-514, eff. 7-17-96; 90-7, eff. 6-10-97;
90-25, eff. 1-1-98; 90-655, eff. 7-30-98; 90-741, eff.
1-1-99.)
Section 99. Effective date. This Act takes effect upon
becoming law.
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